Topy Industries : 〔Delayed〕Consolidated Basis Results of the Fiscal 2022

Consolidated Basis Results of the Fiscal 2022

(April 1, 2022 - March 31, 2023)

		May 10, 2023
Registered Company name: TOPY INDUSTRIES, LIMITED	Stock listing: Tokyo, Nagoya stock exchanges
Code number:	7231	URL: http://www.topy.co.jp/en/index.html
Representative:	Nobuhiko Takamatsu, Representative Director, President and CEO
Contact:	Tetsuya Sakai, Managing Executive Officer and General Manager, General Affairs Department
	Telephone: [phone] / (Overseas) 81-3-3493-0777

Scheduled date for holding of ordinary general meeting of shareholders: June 23, 2023

Scheduled date for dividend payment:

June 6, 2023

Scheduled date for submission of securities report:

June 23, 2023

Preparation of supplementary explanatory materials:

Yes

Holding of financial results meeting:

Yes (for analysts and institutional investors)

(Figures of less than ¥1 million have been omitted)

1. Consolidated Operating Results and Financial Position of the Fiscal 2022 (April 1, 2022 - March 31, 2023)

(1) Consolidated Operating Results

(Percentage figures are changes from the previous fiscal year)

Net sales

Operating profit

Ordinary profit

Profit attributable

to owners of parent

Million yen

％

Million yen

％

Million yen

％

Million yen

％

Fiscal 2022

334,496

23.3

7,175

－

8,043

－

6,321

－

Fiscal 2021

271,178

20.5

(1,706)

－

(1,401)

－

386

(33.2)

Note: Comprehensive income:	Fiscal 2022 ¥8,932 million (48.3%)		Fiscal 2021 ¥6,024 million (23.3%)
	Profit per share	Profit per share		Return on equity	Ordinary profit	Operating profit
	after full dilution		to total assets	to net sales
		Yen		Yen	％	％	％
Fiscal 2022		276.51		－	5.4	2.8	2.1
Fiscal 2021		16.61		－	0.4	(0.5)	(0.6)

(For reference) Share of profit or loss of entities accounted for using equity method: Fiscal 2022

¥452 million

Fiscal 2021

¥ (1,071) million

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen

％

Yen

Fiscal 2022

292,322

121,425

41.1

5,268.92

Fiscal 2021

282,195

113,703

39.9

4,902.25

(For reference) Shareholders' equity:

Fiscal 2022

¥120,265 million

Fiscal 2021

¥112,657 million

(3) Consolidated Cash Flows

Cash flow from

Cash flow from

Cash flow from

Cash and cash equivalents

operating activities

investing activities

financing activities

at end of period

Million yen

Million yen

Million yen

Million yen

Fiscal 2022

15,058

(8,360)

(4,677)

22,588

Fiscal 2021

(5,528)

(2,609)

3,527

19,850

2. Dividends

Dividends per share

Total dividends

Payout ratio

Dividends/

net assets

1Q-end

2Q-end

3Q-end

End of FY

Full fiscal year

(annual)

(consolidated)

(consolidated)

Yen

Yen

Yen

Yen

Yen

Million yen

％

％

Fiscal 2021

－

0.00

－

20.00

20.00

460

120.4

0.4

Fiscal 2022

－

20.00

－

68.00

88.00

2,012

31.8

1.7

Fiscal 2023 (Forecasts)

－

－

－

－

88.00

30.9

Note: The Company's basic policy is to pay dividends of surplus twice a year, comprising interim and year-end dividends. Since the expected amount of interim dividends has not been determined at this time, the total dividend is displayed.

3. Consolidated Financial Forecasts for Fiscal 2023 (April 1, 2023- March 31, 2024)

(Percentage figures are changes from the previous fiscal year)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Profit per share
		owners of parent
	Million yen		％	Million yen	％	Million yen	％	Million yen	％	Yen
Full year	342,000		2.2	9,500	32.4	9,600	19.4	6,500	2.8	284.77

• NOTE
• 1. Changes in the State of Material Subsidiaries during the Period: None
     Newly included: - (Name) - Excluded: - (Name) -
  2. Changes in Accounting Principles, Changes in Accounting Estimates, and Retrospective Restatements
  3. 1. Changes in accounting principles accompanying the amendment of accounting standards: None
     2. Changes other than those in (a) above: None
     3. Changes in accounting estimates: None
     4. Retrospective restatements: None
  4. Number of Shares Issued (Common shares)

(a) Number of shares issued at the end of the period (including treasury shares)

Fiscal 2022

24,077,510 shares

Fiscal 2021

24,077,510 shares

(b) Number of treasury shares at the end of the period

Fiscal 2022

1,252,026 shares

Fiscal 2021

1,096,640 shares

(c) Average number of shares issued during the period

Fiscal 2022

22,860,777 shares

Fiscal 2021

23,274,460 shares

(For reference) Non-Consolidated Results

1. Non-Consolidated Operating Results and Financial Position of the Fiscal 2022 (April 1, 2022 - March 31, 2023)

(1) Non-Consolidated Operating Results

(Percentage figures are changes from the previous fiscal year)

Net sales

Operating profit

Ordinary profit

Profit

Million yen

％

Million yen

％

Million yen

％

Million yen

％

Fiscal 2022

204,103

21.9

3,896

－

6,453

－

6,089

80.7

Fiscal 2021

167,502

34.7

(2,973)

－

142

－

3,370

－

Profit per share

Profit per share

after full dilution

Yen

Yen

Fiscal 2022

266.35

－

Fiscal 2021

144.77

－

(2) Non-Consolidated Financial Position

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen

％

Yen

Fiscal 2022

221,596

79,420

35.8

3,478.92

Fiscal 2021

212,562

74,790

35.2

3,253.98

(For reference) Shareholders' equity:

Fiscal 2022

¥79,420 million

Fiscal 2021

¥74,790 million

2. Non-Consolidated Financial Forecasts for Fiscal 2023 (April 1, 2023 - March 31, 2024)

(Percentage figures are changes from the previous fiscal year)

	Net sales		Operating profit	Ordinary profit	Profit		Profit per share
	Million yen		％	Million yen	％	Million yen	％	Million yen		％	Yen
Full year	226,000		10.7	4,300	10.4	5,900	(8.6)	4,100		(32.7)	179.31

• These Consolidated Basic Results are not included in the scope of audits by certified public accountants or audit corporations.
• Explanation of the Appropriate Use of Performance Forecasts and Other Related Items

(Caution concerning future descriptions etc.)

All future descriptions in this disclosure has been compiled based on information currently available. For assumed conditions underlying the earnings forecast, please refer to "1. Overview of Operating Results" on page 2. These descriptions may differ from actual results and effects on earnings is not limited to this.

(Obtaining supplementary documents of financial results) Supplementary documents will be posted on the Company's website.

Index of Attached Documents
1. Overview of Operating Results	2
(1)	Overview of Operating Results for the Fiscal Year under Review	2
(2)	Overview of Financial Position for the Fiscal Year under Review	3
(3)	Future Outlook	4
(4)	Basic Profit Allocation Policy, and Dividends for the Current and New Fiscal Year	4
2. Basic Policy for the Selection of Accounting Standards	5
3. Consolidated Financial Statements and Important Notes	6
(1)	Consolidated Balance Sheets	6
(2)	Consolidated Statements of Income and Consolidated Statements of Comprehensive Income	8
	Consolidated Statements of Income	8
	Consolidated Statements of Comprehensive Income	9
(3)	Consolidated Statements of Changes in Net Assets	10
(4)	Consolidated Cash Flow Statements	12
(5)	Notes Regarding the Consolidated Financial Statements	14
	(Note related to going-concern assumption)	14
	(Segment information)	14
	(Information per share)	15
	(Important events after the reporting period)	15

Note: This document has been translated from the original Japanese version for reference purposes only. In the event of any discrepancy between this translated document and the original Japanese version, the original shall prevail.

The original disclosure in Japanese was released on May 10, 2023 at 13:30 (GMT+9).

The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

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1. Overview of Operating Results

1. Overview of Operating Results for the Fiscal Year under Review Operating Results for the Consolidated Fiscal Year under Review
   During the consolidated fiscal year under review, the global economy experienced a moderate recovery overall, despite geopolitical risks from the protraction of the situation in Ukraine and unstable market conditions caused by monetary tightening around the world. There were signs of a gradual recovery in the Japanese economy as well, as the employment situation improved and capital investment was on an increasing trend amid the normalization of economic activities. On the other hand, the business environment surrounding TOPY INDUSTRIES, LIMITED (the "Group") remained uncertain due to the impacts from reduced production of automakers caused by semiconductor and other parts shortages and weaker economic activities in China, in addition to cost increases continued for coal, electricity, other raw materials, and logistics, etc.
   Under these circumstances, the Group launched its new Medium-term Management Plan, TOPY Active & Challenge 2025, which will cover the period from FY2022 to 2025. We have set the four areas of promote segment management, strengthen overseas profitability, strengthen domestic business base, and contribute to decarbonization as the Group Basic Strategy, and we are steadily implementing measures to strengthen profitability utilizing the business foundation established in the previous Medium-term Management Plan. Moreover, we are working to promote sustainability management that leverages the Group's strengths to create new value and solve social issues, through TOPY Sustainable Green Vision 2050, which seeks to achieve an enriching and sustainable society in 2050. As part of these efforts, we have promoted health and productivity management initiatives to improve the vitality of our employees, and we were recognized as a Certified Health & Productivity Management Outstanding Organization in 2023.
   In the consolidated fiscal year under review, net sales reached a record high of ¥334,496 million (up 23.3% from the previous fiscal year) thanks to the optimization of sales prices in response to rising costs of raw materials, energy such as electric power, etc., and other raw materials, along with our efforts to win strong demand for ultra-large wheels for mining equipment. Profit also recovered significantly from the previous fiscal year amid efforts to optimize the product mix of steel products and improve costs through structural reforms, etc. Operating income totaled ¥7,175 million (compared to an operating loss of ¥1,706 million in the previous fiscal year), ordinary income reached ¥8,043 million (ordinary loss of ¥1,401 million in the previous fiscal year), and profit attributable to owners of parent came to ¥6,321 million (up 1,535.1% compared to the previous fiscal year). As a result, we achieved a positive free cash flow, and our return on equity (ROE) was 5.4% (0.4% in the previous fiscal year), rising above 5.0% for the first time in four years.

Performance by Segment

(Steel Business)

In the steel industry, domestic crude steel production volume decreased year on year due to a decline in demand for steel materials for construction and manufacturing, which are the main markets. The price of steel scrap, the main raw material, trended at elevated levels, while the prices of other raw materials also remained high.

Given these circumstances, the Group worked to optimize steel sales prices in response to the costs of steel scrap, energy, including electricity, etc., and other raw materials and also optimized the product mix based on market needs. As a result, net sales increased to ¥107,971 million (up 21.4% year on year), and operating profit increased to ¥8,038 million (compared to an operating loss of ¥625 million in the same period of the previous year).

(Automotive & Industrial Machinery Components Business)

In the automotive industry, the production volume in Japan moderately recovered from the level in the previous year due to shortages of semiconductors and other parts resulting in a slower than anticipated recovery in automobile production. In the construction machinery industry, demand was strong in the United States and Southeast Asia, but sales volume of hydraulic excavators declined in Japan. Demand for mining machinery remained strong amid robust demand for resources.

Given these conditions, the Group worked to optimize sales prices in response to the rises in the costs of raw materials in addition to steadily winning demand for ultra-large wheels for mining equipment. At the same time, the Group strived to reduced fixed costs by revamping its production system, etc., through structural reforms. However, net sales came to 198,147 million (up 19.0% year on year) and operating profit totaled ¥4,016 million (down 16.5% year on year), impacted significantly by the decrease in sales volume of models using our wheels for passenger vehicles and substantially higher costs for marine transport and energy, etc.

- 2 -

(Power Business)

The business environment remained more challenging than expected in the power business due to coal prices, a fuel for power generation, remaining at unprecedented historical highs and delayed improvement in electricity selling prices, owing to higher costs caused by yen weakness. Given these circumstances, the Group worked to optimize electricity selling prices. As a result, net sales stood at ¥21,957 million (up 125.9% year on year) and the operating loss improved to ¥566 million (compared to an operating loss of ¥1,957 million in the previous year).

(Business Development Business)

The Group manufactures and sells synthetic mica used in cosmetics and other products. In the synthetic mica business, the Group steadily captured the recovery in demand for cosmetics domestically and internationally. Reflecting this situation, net sales rose 9.1% year on year, to ¥1,043 million with an operating profit amounting to ¥155 million (compared to an operating loss of ¥161 million in the previous fiscal year).

(Leasing Business)

In the leasing business, operating profit was ¥712 million (up 1.9% year on year).

(Others)

The Group operates a civil engineering and construction business, sports club OSSO, and other businesses. Net sales came to ¥5,375 million (up 6.5% year on year) and operating profit was ¥492 million (up 1.2% year on year).

1. Overview of Financial Position for the Fiscal Year under Review Asset, liabilities and net assets
   Total assets at the end of the fiscal year under review stood at ¥292,322 million, an increase of ¥10,126 million from the end of the previous consolidated fiscal year. This was mainly due to increases of ¥11,125 million in notes and accounts receivable trade and contract assets and ¥2,703 million in cash and deposits, compared to a decrease of ¥2,675 million in property, plant and equipment.
   Total liabilities were ¥170,897 million, an increase of ¥2,404 million compared with the end of the previous consolidated fiscal year. This was caused mainly by increases of ¥3,053 million in long-term borrowings and ¥2,819 million in electronically recorded obligations - operating , compared to a decrease of ¥5,501 million in short-term borrowings.
   Total net assets came to ¥121,425 million, an increase of ¥7,721 million from the end of the previous consolidated fiscal year. This was mainly due to increases of ¥5,403 million in retained earnings and ¥3,371 million in foreign currency translation adjustments. As a result, net assets per share stood at ¥5,268.92, resulting in an equity ratio of 41.1%.

Cash flows

Cash and cash equivalents (hereinafter "funds") in the fiscal year under review increased by ¥2,737 million from the end of the previous consolidated fiscal year to ¥22,588 million at the end of the consolidated fiscal year under review.

(Cash flows from operating activities)

Funds gained from operating activities stood at ¥15,058 million (compared to funds used of ¥5,528 million in the previous consolidated fiscal year). This was mainly attributable to profit before income taxes of ¥7,421 million, depreciation of ¥13,295 million, and an increase in trade accounts receivable of ¥10,351 million.

(Cash flows from investment activities)

Funds used in investment activities stood at ¥5,751 million, an increased of ¥8,360 million from the previous consolidated fiscal year. This mainly reflected the purchase of property, plant and equipment of ¥8,130 million.

(Cash flows from financing activities)

Funds used in financing activities stood at ¥4,677 million (compared to funds gained of ¥3,527 million in the previous consolidated fiscal year). This was caused mainly by a decrease of ¥9,900 million in proceeds from long-term borrowings, ¥7,067 million in repayments of long-term debt, and a decrease of ¥6,079 million in short-term borrowings.

- 3 -